Date: 2026-03-31 Type: Stock Analysis (Initiation) Market cap: 6.68B|* * Price : ** 31.11 | Shares diluted: 247.8M EV: ~$6.04B | TTM Revenue: $507M | EV/TTM Rev: ~11.9X Atlas baseline: Read and referenced. I agree with Atlas's 4/5 conviction score and "Accelerating" trajectory. I diverge on valuation assessment given the March re-pricing (market cap has risen from $3.8B to $6.68B since Atlas's February review) and I provide a more granular revenue quality decomposition.
Figure Technology Solutions is the dominant blockchain-native capital marketplace for tokenized consumer lending, commanding roughly 75% market share in RWA tokenization with $22 billion in cumulative HELOC originations. I haven't covered this company in the newsletter, but applying my framework, what I see is a rare combination: revenue accelerating from 12% to 91% YoY over four consecutive quarters, adjusted EBITDA margins of 49% for FY25 (targeting 60%+ medium-term), and a platform transition to capital-light infrastructure via Figure Connect that is happening in real time — 54% of marketplace volume now flows through Connect, up from essentially zero a year ago. The risk profile is material — 76% customer concentration in UPB purchases, a co-founder with reputational baggage, only two quarters of public history, and revenue streams that are inherently lumpier than subscription SaaS. At ~8X estimated forward EV/S on a company with a plausible 40%+ CAGR, the growth-adjusted valuation is among the cheapest I have seen in the current market environment. This is investable, but with discipline on position sizing given the concentration and execution risks.
Figure operates at the intersection of consumer lending and blockchain infrastructure. The business has three distinct layers:
Layer 1 — Loan origination system (LOS). Figure and its 307+ partners originate HELOCs, first-lien mortgages, DSCR loans, SMB loans, crypto-backed loans, and residential transition loans. This is the legacy of the company — Mike Cagney built the original Figure lending business in 2018, and the platform has originated 22billioncumulatively.Originationfees(72.5M FY25) and gain on sale of loans ($180M FY25) are the dominant revenue streams today.
Layer 2 — Figure Connect (capital-light marketplace). Launched June 2024, Connect is a whole-loan exchange where partners originate and buyers purchase — Figure takes a fee without warehousing loans on its own balance sheet. Connect went from $8M in volume in Q4 FY24 to $1.5B in Q4 FY25, now representing 54% of total marketplace volume. This is the transformation: from balance-sheet lender to marketplace operator. The contribution margin on Connect volume is approximately 80%, per management.
Layer 3 — Blockchain ecosystem. Provenance Blockchain (the infrastructure), DART (digital asset registry, 91% adoption among participants), YLDS (SEC-registered yield-bearing stablecoin, $328M at Q4 close, $464M as of Feb 15), Democratized Prime (on-chain lending marketplace, $337M matched offers), and OPEN (blockchain-native equity trading). This is the optionality layer — hard to value precisely today, but the trajectory of YLDS (zero to 464Min 6months)andDemocratizedPrime(206M matched offers at Q4, up from essentially zero) suggests these are not vaporware.
The differentiation is real: Figure's first-lien mortgage costs less than $1,000 and closes in 5 days versus the industry average of $11,045. That is not a marginal improvement — it is an order-of-magnitude disruption. AAA ratings from S&P and Moody's on its securitization vehicle (the first for blockchain finance) validate the credit quality of what is being originated on the platform.
| | Q124 | Q224 | Q324 | Q424 | Q125 | Q225 | Q325 | Q425 | | | Mar-24 | Jun-24 | Sep-24 | Dec-24 | Mar-25 | Jun-25 | Sep-25 | Dec-25 | |---|---|---|---|---|---|---|---|---| | Revenue ($m) | 75.3 | 80.8 | 101.0 | 83.9 | 84.5 | 106.1 | 156.4 | 159.9 | | QoQ % | -- | 7.3% | 25.1% | -17.0% | 0.8% | 25.5% | 47.4% | 2.3% | | YoY % | -- | -- | -- | -- | 12.3% | 31.4% | 54.8% | 90.8% |
FY24 total: $340.9M. FY25 total: $506.9M (+48.7% YoY). The YoY acceleration from 12% to 31% to 55% to 91% over FY25 is striking. I note two things: (1) the sequential pattern shows Q3 peaks and Q4/Q1 troughs — this is seasonality in home-based lending (Nov-Feb is winter), not a business deceleration; (2) the fact that Q4 FY25 grew 91% YoY while Q4 FY24 was the weakest quarter in FY24 means the comp was soft, and future YoY comps will be harder. I am estimating FY26 CAGR in the 40-50% range, not 90%.
This is where FIGR diverges from typical subscription SaaS and requires a different analytical lens:
| Revenue Stream | FY24 ($m) | FY25 ($m) | YoY % | Quality Assessment |
|---|---|---|---|---|
| Ecosystem & Tech Fees | 28.3 | 120.8 | +327% | Highest quality. Platform take-rate. Recurring. Growing share. |
| Gain on Sale of Loans | 140.4 | 180.0 | +28% | Lumpy. Depends on securitization timing & credit spreads. |
| Interest Income | 48.2 | 74.8 | +55% | Moderate quality. Scales with servicing book. Rate-sensitive. |
| Origination Fees | 64.9 | 72.5 | +12% | Moderate. Volume-driven. Slowing as Connect shifts mix. |
| Servicing Fees | 25.2 | 31.5 | +25% | High quality. Recurring, grows with servicing UPB. |
| Gain on Servicing Asset | 32.6 | 24.5 | -25% | Low quality. Mark-to-market accounting. Volatile. |
| Other | 1.3 | 2.6 | +100% | Immaterial. |
The critical trend: Ecosystem & Tech Fees went from 8.3% of FY24 revenue to 23.8% of FY25 revenue. This is the platform monetization — it is the highest-quality, most recurring stream, and it is growing 5X faster than the overall business. If this stream continues to expand as a share of revenue, the overall revenue quality of the business improves structurally over time. This is the same dynamic I look for in software — the equivalent of platform revenue displacing professional services.
| Q324 | Q424 | Q325 | Q425 | FY24 | FY25 | |
|---|---|---|---|---|---|---|
| Adj EBITDA ($m) | 49.4 | 15.4 | 86.4 | 81.3 | 101.4 | 251.2 |
| Adj EBITDA Margin | 44.9% | 20.2% | 55.4% | 51.6% | 29.9% | 48.8% |
| GAAP Op Income ($m) | 26.1 | -0.8 | 52.7 | 29.0 | 9.2 | 117.5 |
| GAAP Net Income ($m) | 27.4 | 5.9 | 89.8* | 15.1 | 19.9 | 134.3 |
*Q3 FY25 net income includes ~$32M one-time tax benefit from Recombination.
The EBITDA margin expansion from (5.6%) in FY23 to 29.9% FY24 to 48.8% FY25 is extraordinary. Management is targeting 60%+ medium-term. With contribution margins of ~80% on Figure Connect volume, and fixed infrastructure costs that do not scale linearly with volume, I believe 60% is achievable as Connect exceeds 60-70% of marketplace volume.
Q4 FY25 SBC was 40.2M—2562.9M). Management states this was one-time: fully vested advisor grants and graded vesting acceleration from the September IPO. Forward guidance is ~$21M/quarter (~13% of annualized revenue). This must be verified in Q1 FY26 results. At $21M/quarter, SBC is tolerable. At $40M/quarter, it would consume nearly all of the EBITDA margin improvement.
FCF data is limited: $11.1M (Q3 FY25), 8.7M(Q4FY25).ThisislowrelativetoEBITDAbecausethelendingmodelrequiresworkingcapitalforloansheldforsale(404M at Q4 close). As Figure Connect scales (capital-light = no loans on balance sheet), FCF conversion should improve materially. This is a "watch" item, not a red flag.
| Indicator | Q3 FY25 | Q4 FY25 | Trend | Signal |
|---|---|---|---|---|
| Marketplace Volume ($B) | 2.47 | 2.71 (+131% YoY) | Accelerating | Bullish — grows faster than revenue |
| Figure Connect Volume ($B) | 1.13 | 1.50 | Rapid adoption | Bullish — 54% of total volume |
| Active Partners | 246 | 307 (+25% QoQ) | Accelerating | Bullish — nearly doubled in 6 months |
| Ecosystem & Tech Fees ($M) | 35.7 | 41.4 (+388% YoY) | Parabolic | Bullish — platform monetization |
| YLDS Balance ($M) | 100 | 328 (464 Feb 15) | Parabolic | Bullish — stablecoin adoption |
| Dem Prime Matched ($M) | ~34 | 337 (Feb 15) | Explosive | Bullish — new product traction |
| Net Take Rate | 4.4% | 3.8% | Declining | Neutral — product mix, not competitive pressure |
| First-Lien % of Originations | -- | 19% (vs 12% YoY) | Rising | Bullish — larger TAM, lower bps but higher $ |
Every leading indicator I track is positive. Marketplace volume growing 131% YoY while revenue grows 91% YoY means there is embedded revenue acceleration — volume is the leading indicator for revenue. The partner count at 307 (with a 3-month ramp time, per management) means the Q1/Q2 FY26 revenue pipeline is already being built.
Figure has a genuine moat, though it is not a traditional software moat:
Network effects. More partners on Provenance Blockchain -> more liquidity on Figure Connect -> tighter spreads for loan buyers -> more buyers -> more partners. Classic marketplace flywheel.
Regulatory/compliance moat. AAA ratings from S&P and Moody's on blockchain securitization — no competitor has this. 91% DART adoption standardizes lien perfection on Figure's infrastructure.
Cost advantage. First-lien mortgage: <$1,000 in 5 days vs. $11,045 industry average. Structurally cheaper via blockchain rails.
Switching costs. API-integrated partners with origination workflows built on Figure's LOS face significant switching costs. Connect adoption deepens these further.
Competitors exist in narrow segments — SoFi/Rocket in HELOC, Coinbase/Securitize in digital assets, Amount/Percent in lending infrastructure — but no single competitor offers the integrated stack: origination -> marketplace -> securitization -> stablecoin settlement -> on-chain equity trading.
The Agora partnership is the proof point — first third-party borrower bringing assets onto Connect and Democratized Prime.
Current metrics (March 31, 2026):
Forward estimates (deliberately undemanding):
3-Year CAGR estimate: 35-40% from FY25.
Cohort comparison: For 35-40% CAGR, typical EV/S is 7-14X. FIGR at ~8X forward sits in the lower portion. With 50%+ EBITDA margins, this is a meaningful discount — most peers have significantly lower profitability.
PEG: Forward P/EBITDA ~15X on 45-50% growth = PEG ~0.30-0.33X. Well below 0.5X = exceptional value.
Peers:
Analyst consensus: 9 analysts, average PT ~$58-60, range 42−75. ~90% upside implied from ~$31.
Rating: Buy on weakness. I would initiate at 2-3% portfolio weight, not a full position, given the concentration risk and limited public history. This is not a company for a concentration limit. Increase as customer diversification improves and management demonstrates reliable execution.
Conditions for increasing conviction:
Conditions for reassessment:
| Dimension | Prior | Updated |
|---|---|---|
| Coverage | No prior Bert coverage | Initiating. GARP framework applied to fintech outside typical SaaS cohort. |
| Revenue quality | N/A | Mixed — Ecosystem & Tech Fees are high quality, growing fastest; gain-on-sale is lumpy. Trajectory toward higher-quality mix. |
| Profitability | N/A | Exceptional for 50%+ grower. 49% EBITDA margin with credible path to 60%+. |
| Valuation | N/A | Cheap on every metric. ~8X forward EV/S, PEG 0.3X. Growth-adjusted among cheapest in universe. |
| Risk profile | N/A | Higher than typical. Customer concentration + limited history + lumpiness + Cagney. Position size accordingly. |
| Thesis | N/A | Platform transition with verifiable leading indicators. Not a "could be" — happening in the numbers. |
Atlas noted 4/5 conviction and highlighted partner count decline concern — full Q4 results resolved this (307 partners, +25% QoQ). Atlas's valuation at $3.8B market cap was attractive; at current $6.68B, less egregiously cheap but still a meaningful discount to growth cohort.
Position disclosure: No position. Initiating coverage.